Indonesian airports not ready for Open Sky Policy

Indonesian aviation observer Dudi Sudibyo recently stated Indonesia was not prepared for the implementation of the ASEAN Open Sky Policy in 2015 (The Jakarta Post, 07-Sep-2010). Five of the 26 international airports currently meet the standards for the Open Sky Policy. Mr Sudibyo added: “The Open Sky Policy is imminent but our airports are still facing many unnecessary problems like blackouts and radar failures. We are not ready for this agreement.”

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Indonesia-based Lion Group expanded its fleet by 16 aircraft in 1H2016, cementing its position as the largest airline group in Southeast Asia. Lion now has a fleet of more than 250 aircraft while its rival AirAsia – the region’s second largest group – has under 200 aircraft based in Southeast Asia.

However a net gain of 16 aircraft over the last six months marks a slowdown for Lion. The group’s fleet grew by 59 aircraft in 2015 and 39 aircraft in 2014.

None of Lion Group’s five airline subsidiaries or affiliates added more than five aircraft in 1H2016, resulting in relatively modest capacity expansion. The rate of expansion will likely pick up in 2H2016 but not approach previous levels.

Garuda Indonesia is planning further international expansion in 4Q2016 and 2017, despite a recent lacklustre performance in the international market. Garuda is adding capacity to China in 4Q2016 and aiming to launch services to the US in 2017.

Garuda’s international load factor was only 70% through the first eight months of 2016 as the airline struggled to fill additional seats generated by an 18% increase in ASKs. International yields have also declined as Garuda swung back into the red in 1H2016.

The long haul network has particularly struggled, driving the drop in profitability. However Garuda is keen to continue strategic expansion.